Momentum at last for S.J. home building

San Joaquin County home construction is moving at the fastest rate since the start of the Great Recession.

Reed Fujii

San Joaquin County home construction is moving at the fastest rate since the start of the Great Recession.

At the current pace, builders could put up more than 1,500 new homes and apartments in the county by year's end with a value of more than $360 million.

While that would be a roughly 50 percent increase from 2012, residential construction gains look good only because the recent past was so bad, said John Beckman, executive officer of the Building Industry Association of the Delta.

"The worst five years on record in the history of home building was the past five years," he said Tuesday.

"We're still not out of the woods, but we're not still creating new records with our bad numbers," Beckman said. "I would call this our first recovery year."

Jeffrey Michael, director of the Business Forecasting Center at University of the Pacific, agreed with that assessment.

From 2008 through 2012, there were roughly 1,000 or fewer new home building permits issued for San Joaquin County.

"This is the first year where there is a measurable step forward in activity and momentum," Michael said.

According to figures from the California Homebuilding Foundation, countywide permits for nearly 700 single-family homes and 70 units of multifamily housing were issued in the first half of the year. The declared value of those projects totaled $180 million.

"This is still exceptionally low when you compare it to anything but the last five years," Michael noted.

In 2012, the foundation reported, the county saw about 1,050 units of new housing worth $250 million and in 2011 about 880 homes and apartments valued at $174 million.

While housing construction does vary widely from year to year, Beckman said San Joaquin County really needs about 3,000 new dwelling units annually over the long term.

Most of this year's new construction is occurring in the south county with about 350, or half of all the single-family homes, being built in unincorporated San Joaquin County and another 170 in Manteca, the home building foundation reported. The experts said most of those county permits were for the Mountain House community.

Stockton, by far the county's largest city, saw fewer than 60 single-family home permits issued in the year's first half, as well as 70 apartment units.

What's driving that growth is the proximity to the Bay Area, where housing prices are rapidly rising.

"(Mountain House is) the closest property to the Bay Area," Beckman said. "You should start to see Tracy really ramp up next year."

Michael said the collapse in existing home prices, following the prime mortgage meltdown, undercut the cost of building new homes. It will be some time before the economics turn in favor of new construction.

"But we've seen median home prices increase by well over 20 percent in the past year, so they're getting much closer where they need to be for new homes to compete with existing homes," he said.

"We're on pace to add about another (1,500) homes this year, and our projections are it's going to pick up from there," Michael said.

He expects the county to see construction of about 2,500 new homes in 2014 and 3,500 the year after that.